Question:
I just had the oddest conversation with my boss. He asked, “How would you like to own your own business? Be your own boss?”
It took me a minute to realize he was serious, and then I asked, “What’s the catch?”
“There isn’t one,” he said. “If you become a franchisee, you and I can create a business-to-business relationship. That will be a win for you, and a win for me.”
“How’s that?” I asked.
“I’ll guarantee your new business work from my business. I’ll be a subsidy client for you, and you can branch out from there. For me, it will lower my payroll expenses. But the big win will be yours.”
He acted like I should be thrilled, that we should break out the champagne and celebrate. He then gave me franchise paperwork to sign and a list of Internet websites that I could use to set up my business.
So, what’s the catch he isn’t telling me about?
Answer:
Your boss wants to lower his payroll costs. While he presents this strategy to you as a win-win, and it may be if you’ve always longed to run your own business, think long and hard before you accept. Once you become a franchise owner, you lose standard employee protections, such as overtime and safety protections.
Unless you and your former boss radically change how you work together, this paper façade can burn up in a heartbeat. The U.S. Department of Labor investigates franchises and when they learn that employees one day become LLC owners the next day, they go after the employers for penalties and damages and explain to the new LLC “owners” that they’re employees but have been without wage or safety protection. Further, if your new business has safety or other problems, you’ll be on your own.
At the same time, if you want your own business and fully embrace this new challenge, your boss’s offer gives you a head start.
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My first thought: It sounds too good to be true. There has to be a catch somewhere.
And Lynne presents the catches: you no longer are an employee, with employee protections about things such as wages, safety, and overtime. The agreement may be found null and void by the Department of Labor.
Further, what is the context in which this offer is made? What has the relationship between employee and boss been like before this? Has the boss been honest and accountable? Has the boss been a mentor or found someone else to be a mentor? Doss the boss think well of this employee? Has the employee gotten good performance ratings, bonuses, raises in pay, other incentives for performance and staying with the company? IF not, head for the hills and find a new job. Now. If so, there may some things to think about and talk about here.
Susan, you’ve got it exactly. For the employee, this sounds initially fabulous, but there are definitely catches:)
For years I worked for a private employer as a “contractor”. But they were my only client, I worked in their office, they provided all the equipment and tools to do my job. The reality was they were trying to avoid payroll taxes and workman’s comp, etc. However, when it made the news that the federal government was cracking down on employers (such as FedEx and some of the gig employers) that were abusing the “contractor” status, my employer made me a regular employee. It could be that this is what’s going on here, in reverse.